Three Ways to Avoid Probate Costs
Many probate costs can be reduced by avoiding probate. How much simpler could it get.
1. Probate only applies to accounts or property that is in your name at death. If you name a beneficiary those assets transfer without the probate court getting involved. Some common beneficiary designation assets: annuities, retirement plans, life insurance, bank accounts, real estate.
Please note that if you name a beneficiary that beneficiary gets the account or property outright. This means if they have creditors going after them that property may end up in the hands of their creditors.
2. The Revocable Living Trust RLT. It is the BLT of estate planning. Once the RLT has been created, and you have properly transferred the ownership of your accounts and property to the RLT by re-titling them into the name of the trust, you remain in charge of all legal decisions until your death as the trustee, and you retain the enjoyment of those accounts and property as the current beneficiary. After your death, your named successor trustee will manage and distribute your assets – according to your wishes. A trust works well if it is properly created and funded by an experienced estate planning attorney.
3. Own Property Jointly. Probate can also be avoided if the property you own is held jointly with a right of survivorship. Similarly to a beneficiary designation, joint ownership has the effect of automatically transferring the ownership upon your death. There are several ways that you can establish joint ownership of property, such as:
● Joint tenancy with right of survivorship – ownership simply transfers to other tenants upon your death;
● Tenancy by its entirety – a form of joint tenancy with a right of survivorship, but only for married couples in some states;
● Community property – property obtained during a marriage in some states;
State laws play an important role here. We can help you determine which form of joint ownership, if any, is a good fit for you.
Caution: Just as with a beneficiary designation, adding a joint owner to your accounts or property can subject the accounts or property to claims asserted by the new joint owner’s creditors. Moreover, this vulnerability begins the moment they are added. This means that your accounts or property could be seized by your new joint owner’s creditors even while you are still alive.
Always remember that if you do NOT do some or all of the above, then when your heirs contact an attorney, that attorney will unfortunately have to give them the bad news:
When a deceased person’s estate (all of their money and property) has to go through probate (the court-supervised process of distributing a deceased person’s money and property), it can be subject to a variety of costs stemming from attorneys, executors, appraisers, accountants, courts, and state law. Depending on the probate's complexity, fees can run into tens of thousands of dollars or more.
We Have the Tools to Help You
Contact our office today to schedule your appointment. As an added convenience for our clients, we are available to hold our meetings through video conferencing or by phone if you prefer. We are here to help you decide whether it makes sense to avoid probate in your particular case and, if so, the best way to do so.